Situational Analysis - Chickfila

Topics: Marketing, Fast casual restaurant, Fast food restaurant Pages: 5 (1841 words) Published: July 23, 2008
Situation Analysis
External environment
Chick-fil-A is affected by numerous external forces which challenge upper management’s ability to make Chick-fil-A “America’s best quick-service restaurant”. Through intense strategic planning, based upon the vision, mission and corporate values, Chick-fil-A has been able to establish a unique position in a very competitive industry. The corporate purpose of Chick-fil-A, “To glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come into contact witch Chick-fil-A”, their commitment to family and the community, and their sound business decisions, have made Chick-fil-A one of the most profitable and fastest growing quick-service restaurants in the nation.

The fast food restaurant industry, which includes quick-service and fast-casual restaurants, is highly segmented with the top 50 companies accounting for only 25% of the industry’s sales. The $120 billion industry includes over 200,000 restaurants with 50% of those specializing in hamburger entrees. ( 2008) The major competitors in the industry include McDonald’s, Burger King, Taco Bell, Subway, and KFC – Chick-fil-A’s major competitor in chicken sales. Chick-fil-A’s unique position in the market, specializing in chicken-based entrées, has lead to a competitive advantage which the company has been able to capitalize on. Recently, many competitors have added chicken entrees in order to compete in the market segment. Through marketing strategies and company initiatives, Chick-fil-A has tried to stay distant from competitors, offering a fresh alternative to the ordinary fast food restaurant.

The effect the economy plays on the business is the largest external factor a company has no control over. With the current economic state – signs of a recession, increased inflation, and the weakening of the dollar versus the euro – it could be expected companies struggle to increase growth. Despite this, Chick-fil-A has posted positive increases in revenue all 40 years the company has been in business, many of which have been double-digit increases. These increases may seem extraordinary, but Chick-fil-A has used a strategy that ensures their success. Another factor which has the ability to have a major impact on profitability is the increasing price of chicken. With the increasing popularity of ethanol based fuels – made primarily of corn – it is becoming more costly to feed and raise chickens, whose main source of food is corn. This new demand for corn has increased the price, which is in turn passed onto the next buyer. It is necessary for Chick-fil-A to address this issue and formulate a plan of action to try to combat these rising costs.

Chick-fil-A does not have any distinct or visible technological advantages that can distinguish the company from its competitors. The company does, however, have processes in place which gives Chick-fil-A an advantage in both profitability and customer service. First, Chick-fil-A’s smaller menu offering, compared to its competitors, contributes to the company’s large profit margins. Secondly, Chick-fil-A has stringent guidelines and goals concerning service time for customers; customers should wait no more than one minute for service. The combination of these two factors have contributed to the company’s success over the past 40 years.

After analyzing Chick-fil-A’s position in the market, there are no political factors which directly affect the company. It is important for Chick-fil-A to be mindful of these factors though. Just like any fast food restaurant, Chick-fil-A is prone to legal ramifications stemming from customer accidents. In addition, Chick-fil-A has received several complaints alleging religious discrimination. While these legal problems have the potential for negative publicity, Chick-fil-A has managed to keep these allegations under wraps and has vehemently...
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